Updated: July 27, 2000

• Responsible Coordinator: Inter-American Development Bank (IDB)
• Co-coordinators: Argentina, Chile
• Executing Agencies: IDB

In 1994, leaders viewed the development of Micro and Small Enterprises as a cornerstone of the hemispheric integration process. MSEs account for a large portion of the hemisphere's employment, especially the poor and women, and constitute a large portion of many countries' GDP. Mindful of MSEs’ importance to hemisphere’s economies, the Miami Plan of Action set a course to which member nations pledged their support and made the following commitments:

• To pursue deregulation and administrative simplification programs;
• To facilitate access to information regarding new technologies, markets,  raw materials, and management systems in order to increase competitiveness in global markets;
• To develop financial deregulation that will reduce costs in credit transactions and strengthen microenterprises and small businesses' institutional capacity;
• To support better relations between public and private institutions so they may work together to finance, inform, train, and technically  assist MSEs;
• To increase the IDB's and the World Bank's involvement in order to fortify mechanisms and funds that support MSEs.

It was noted in the Miami Plan of Action, that the IDB and other development agencies have committed close to $1 billion dollars to the promotion of MSEs throughout the Hemisphere. The IDB planned to invest another $500 million over five years in loans and technical assistance for microenterprise promotion.

The Inter-American Development Bank:

In fulfillment of the Summit mandate, the Inter-American Development Bank began to implement its commitment to invest over $500 million in loans and technical assistance for microenterprise promotion over a five-year period (1994-1999) through their Microenterprise Development Strategy. The main components of this strategy, as laid out in 1994, were:

• The creation of a favorable regulatory environment and policies.
• The creation of institutions that would provide services to microenterprise.
• Improved access to financial and non-financial service for MSEs with few resources.
• Investing private resources into microenterprise development.

In 1997, the IDB reiterated their commitment to microenterprise development by putting forward their rationale; declaring the objectives and main components of their strategy; and outlining the problems that the Bank seeks to address and its investment programs for action. They understand that microenterprises make a major contribution to aggregate employment, production, and national income, and that MSEs are an important vehicle for low-income people to escape poverty through market-driven, productive activities. Therefore, they are willing to work hard to expand economic opportunities through sustainable, dynamic microenterprise development. Their objective is to promote the conditions necessary for the growth and development of the microenterprise sector in the region. Their strategy to promote reform and development is tailored to fit the needs of each region. And the implementation of the Bank’s main operation will be accomplished through operational instruments (Microenterprise Development Strategy).

One such instrument is the Small Projects Program, which promotes social entrepreneurship in Latin America and the Caribbean. The IDB provided $37 million in loans and $20 million in technical assistance to NGOs through SPP. In turn, these organizations could strengthen their own operations and extend the range and quality of services they can offer microenterpreneurs. One new initiative is the Small Projects Facility and Technical Assistance for Marginal Groups in Southeastern Mexico, approved in 1997. Fifteen million dollars in credit and technical assistance was provided through this project. In addition, the IDB’s Global Loans Program has provided $47 million to financial institutions that work in the sector since 1994.

Other operations also fund MSEs. One such example is the Multilateral Investment Fund, which invests in equity and quasi-equity instruments to expand the resources of microfinance institutions. Loans of over $22 million and technical assistance grants of over $25 million have been provided since 1994 to foster business development services and the improvement of microfinance institutions. One example of the benefit of this program is the establishment of the 'Banco de la Pequena Empresa', S.A. in the Dominican Republic. Furthermore, the loan capacity of the Credit Bank of Panama has been greatly increased through the IDB’s Multilateral Investment Fund. Finally, the Fund helped to create the 'Instituto Latinamericano de Microfinanzas'; a group of training institutions devoted to the strengthening of finance companies within the MSE sector.

U.S. Agency for International Development (USAID):

USAID invested about $118 million in the sector between 1994 and 1997, and planned to contribute $40 million more in 1998. This funding supported microenterprise projects in 12 countries in the region. The purpose of the loans and programs was to allow MSEs to attain such self-sufficiency that they could independently tap commercial sources of funding. USAID sponsored a conference on Micro Credit issues in February 1997, which was attended by over 2500 delegates.

Consultative Group to Assist the Poorest (CGAP):

Eighteen donor countries created the World Bank's CGAP in 1995 in order to assist with the development of microfinance services for the poor and disenfranchised. The group today has upwards of 25 members, including the IDB and USAID. CGAP has 4 objectives:

• To strengthen collaboration among donors in microfinance
• To share and distribute information about successful microfinance experiences to the public
• To increase and improve MSE support activities, especially at the World Bank
• To invest in certain microfinance institutions.

Country Agencies and Initiatives:

According to an IDB questionnaire, which was sent to twenty-six nations in the Hemisphere, all, in some way or another, had created their own governmental and/or hybrid public/private sector agencies to implement MSE policies and programs by 1997.  In comparison, only 10 countries surveyed in the same questionnaire in 1995 had developed these strategies.

A good example of one of these successful and active agencies is the U.S. Treasury’s Community Development Financial Institutions Fund (CDFI).  The Treasury and Commerce Departments have also established the Federal Microenterprise Initiative to work within the sector.   Like other countries in the Hemisphere, the U.S. has invested substantial amounts in MSEs by creating new agencies and institutions such as these. It has also worked with NGOs to provide access to credit for poor U.S. communities.

In accordance with the first objective of the Miami Plan of Action, major steps have also been taken in the hemisphere to deregulate and simplify the administration of MSEs. This stable financial environment has led to the greater participation by commercial banks and non-traditional financial institutions in the provision of services to the MSE sector.

Efforts are also underway to improve MSE's legal and regulatory environment.  The Peruvian entity known as 'Entidades de Desarrollo de las Peque�as y Microempresas' is one example. Other countries have established incentives to support the sector, such as tax exemptions in Barbados, technical and training assistance in Argentina, and guarantee funds in Nicaragua, Colombia, Uruguay and Mexico.

Along with training and support networks, efforts are being made to increase the information available to MSEs. MERCOSUR countries created the 'Redsur-Integrando Empresas', for instance, which uses the Internet to disseminate information. Similar efforts are being implemented in other countries.